Financial West Group, headquartered in Westlake Village, California, was censured and fined $40,000.00 by Financial Industry Regulatory Authority (FINRA) after consenting to findings that the firm’s supervisory systems and procedures concerning the due diligence of private placements were inadequate. Letter of Acceptance, Waiver and Consent, No. 66483 (Aug. 16, 2016).
According to the AWC, between October 1, 2008, and June 30, 2015, the firm’s supervisory protocols did not address significant aspects concerning the due diligence associated with private placements that Financial West Group had participated in. The AWC stated that the firm’s supervisory procedures failed to address the processes for how to approve a private placement offering, and also failed to detail a process for evaluating such.
FINRA additionally found that the firm did not follow its own written procedures in a consistent manner regarding the private placement offerings. In one example provided by FINRA, the firm apparently did not document reviews of private placements as the supervisory procedures called for. FINRA found that the firm’s inadequacies in this regard constituted violations of NASD Rules 3010(a) and 3010(b)(1), in addition to FINRA Rules 3110(a) and 3110(b)(1). FINRA found that the firm’s aforementioned violations also meant that the firm had violated NASD Rule 2110 as well as FINRA Rule 2010.
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